Rumors are swirling that the long-awaited answer to the key question vexing the MTA — how the state’s $8.3 billion share of the unfunded portion of the MTA capital plan will be paid for — is that dreaded four-letter word: D-E-B-T.
According to the terms of a deal reached by Governor Andrew Cuomo and Mayor de Blasio in October, any additional debt should not be backed by MTA fares. But that deal could unravel — now, or in the future, when Cuomo is out of office.
What is the risk to straphangers if the deal implodes? I took a shot at calculating the answer, using my Balanced Transportation Analyzer model (Excel file).
The bottom line is that if the October agreement doesn’t hold up, financing the entire $8.3 billion “on the backs of transit users” would raise fares around 22-23 cents per ride. That would equate to an average 12 percent fare hike on top of the current average fare of $1.92. (That figure takes into account unlimiteds, free transfers, senior discounts, etc. and thus is well below the nominal $2.75 single-ride rate.)
The current 30-day unlimited price of $116.50 would rise by $14.00, shooting to $130.50, with the annualized increase of $168 surpassing the $149 cost of a Citi Bike membership. And the increase would be on top of the 4 percent biennial fare hikes the MTA has programmed indefinitely to cover rising operations costs.
As harsh as that would be, it’s a mere half of the impact I estimated here last May, before the MTA trimmed both the scope and cost of its 2015-2019 capital plan and before Governor Cuomo offloaded $2.5 billion in financing obligations onto Mayor de Blasio, reducing the state’s unfunded commitment to $8.3 billion.
On the other hand, holding the hit to 12 percent assumes favorable financing, notwithstanding the Federal Reserve’s boost in interest rates last month as well as the potential strain on the state’s borrowing capacity from other infrastructure projects that the governor announced last week. Just a one point increase in the MTA’s borrowing rate, to 5 percent instead of the 4 percent I’ve assumed, would tack another three or four cents onto the required fare hike.
In addition to further impoverishing millions of low-income New Yorkers, a 12 percent increase in subway and bus fares would be projected to have these consequences, based on the BTA model: